NOTICE DATE: February 15, 2021
NOTICE TYPE: M-C021521-01 Legal
SHORT DESCRIPTION: Emergency Order of the Public Utility Commission Affecting ERCOT Market Prices
INTENDED AUDIENCE: ERCOT Market Participants
DAY AFFECTED: February 15, 2021
LONG DESCRIPTION: On February 15, 2021, the Public Utility Commission of Texas entered an order requiring ERCOT to address pricing issues that are significantly affecting the ERCOT Market during the ongoing Energy Emergency Alert (EEA) Level 3 conditions. This Market Notice explains how ERCOT intends to implement certain directives under this order.
First, the order requires ERCOT to “ensure that firm load that is being shed in EEA3 is accounted for in ERCOT’s scarcity pricing signals.” This directive is based on the Commission’s observation in the order that energy prices of less than $9,000/MWh during load-shed conditions are “inconsistent with the fundamental design of the ERCOT Market.” ERCOT will implement the pricing outcomes directed by the order by making an administrative adjustment to the Generation To Be Dispatched value in the Real-Time Reliability Deployment Price Adder process during all intervals in which ERCOT has directed firm Load shed. This adjustment will be equal to the cumulative MW ERCOT has directed for Load shed during each Security-Constrained Economic Dispatch (SCED) interval. To make use of existing system functionality and strictly for purposes of the Real-Time Reliability Deployment Price Adder process, this cumulative MW value will be entered in as a Real-Time Block Load Transfer import (RTBLTIMPORT) and will appear in any associated Market-facing reports as such. This change has already been implemented and will operate prospectively until the Commission directs otherwise.
Second, the order recognizes that ERCOT may soon reach the Peaker Net Margin revenue threshold established in PUC Rule 25.505(g)(6), which requires ERCOT to use the Low System-Wide Offer Cap (LCAP) instead of the $9,000 High System-Wide Offer Cap (HCAP) currently in effect. The order notes that the use of the LCAP as required by the rule could result in prices that exceed the HCAP, given current gas prices. Consequently, the order directs ERCOT to “suspend any use of the LCAP until after the Commission’s regularly-scheduled next open meeting,” and to “continue to use the HCAP as the system-wide offer cap until that time.” In accordance with this order, ERCOT will continue to use the HCAP as the System-Wide Offer Cap until after the Commission’s next open meeting.
ADDITIONAL INFORMATION: The PUC’s February 15, 2021 Order is available at http://www.puc.texas.gov/51617WinterERCOTOrder.pdf.
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